How Vehicle-to-Grid can revolutionize the energy industry

95% of the time, electric cars are not used by their owners – they are just sitting around with stored power. But why not put those batteries to good use?

Vehicle-to-Grid (V2G) is an idea that has mostly been in the testing phase for the last several years. V2G promotes electric vehicle (EV) owners to connect their batteries to the grid and distribute the energy to those who need it. This way, on-demand power can be used to balance the grid during peak times for consumption, which is a top priority for energy providers, dodging expensive costs by not having to run additional generation. When using renewable energy, it’s not always enough (and sometimes there’s too much) and enabling V2G helps fill the gaps in generation and consumption.

V2G would also keep electricity running during outages. This is especially important during natural disasters, when electricity is limited (and necessary for emergency services like hospitals). In disaster-prone areas that have already adopted this concept, such as Japan, V2G helps combat electricity loss during tsunamis and earthquakes.

V2G also pairs well with digital transformation technologies. For example, with AI algorithms, EVs could drive autonomously to the best locations to charge or release energy back into the network, ultimately preventing congestion on LV/MV distribution networks in highly populated areas.

Current status in V2G adoption

Nissan, one of the early movers, announced in late 2018 that its car, Nissan Leaf, became the first EV to secure regulatory approval as a power backup for Germany’s electric grid. The pilot project in January 2019 showed promising results and the company was able to sell about 8 kWh of electricity back to the grid over a course of one week and earn about 20 euros.

In September 2019, Nissan signed an agreement with French utility EDF to accelerate the delivery of electric mobility by developing smart charging solutions (V2G). Nissan would be responsible for the sale of V2G compatible electric vehicles, and EDF would oversee V2G charging solutions and related services.

In Italy, Fiat Chrysler signed an agreement with national transmission system operator Terna to set up an experimental fleet of up to 700 EVs to test V2G technology. Mitsubishi Motors, Hitachi Electronics and ENGIE have tied up to investigate the potential of the V2G technology. The consortium linked their first vehicle-to-everything (V2X) charger to ENGIE’s office building in the Netherlands.

EDF has also set up a joint venture with US based V2G technology specialist Nuvve for development of V2G charging solutions. The joint venture, DREEV, already has a few installations running in France and the UK. In UK, EDF Energy targets to install about 1,500 V2G connections together with Nuvve. With each V2G charger having a capacity of 10kWh, these chargers are expected to provide up to 15MW of electricity equivalent to energy required to power about 4,000 homes.

In its latest Future Energy Scenarios report, National Grid forecasts about 11M EVs in UK by 2030 and about 36M by 2040. All scenarios in the report model show that just 2% of EVs will provide V2G services implying about 220,000 vehicles would provide V2G services in UK by 2030. With a 10kWh bi-directional charger, thee vehicles could together represent more than 2GW of power fed back into the grid … an equivalent of 2 large power plants.

V2G challenges

In terms of V2G potential, both commercial and household markets appear attractive for Utilities however from a scale perspective, B2B may hold bigger benefits. Utilities can tie up with fleet managers with space in parking lots to install chargers and importantly, adequate number of vehicles (battery capacity) to offer cost-effective charging and discharging solutions.

Despite the apparent operational and monetary benefits, the road ahead appears bumpy for the Utilities. There are many challenges – technical, regulatory and behavioral – to be overcome before the V2G technology can become mainstream and its true benefits can be harvested.

As with most early-phase technologies, the adoption of V2G technology will be largely driven by economic benefits to vehicle owners. The vehicle owners may receive direct compensation or preferential pricing to charge the vehicle in return of feeding their vehicle battery’s charge to the grid in the form of electricity.

However, to derive real benefits from V2G technology for both the participants (vehicle owner and utility), Utilities must invest in developing a fully automated system to analyze huge amount of data and make financial decisions in real-time. The system will require extensive telemetry throughout the electricity value-chain and in the EV, along with real-time information about the grid frequency, predicted generation capacity availability, electricity price and EV owner’s preferences etc.

Standards must also be set for equipment, such as universal plugins, sockets and chargers. This would make the lives of EV owners and EV manufacturers much easier by not requiring a bunch of converters. Fortunately, car manufacturers, regulators and technology providers are already working toward reaching this goal within the next few years.

From a vehicle owner’s perspective, Utilities will have to invest in developing energy management systems (app based or portal) to provide them complete oversight of their energy use, cost, benefits, transactions, billing and associated analytics etc. regardless of complexity behind the scenes.

V2G forecast

It is likely that during initial phases, V2G enabled vehicles would serve as a distributed battery storage system to buffer power. These vehicles would be recharged during off-peak hours at cheaper rates, helping to absorb excess nighttime generation while providing power to the grid in response to peak load demands. This will help the utility in better demand side management and avoiding the requirement of firing a peaking power plant – a rather costly affair for Utilities.

To achieve this, the Utilities will have to deploy robust smart grid technologies to manage varying feed-in (V2G) and withdrawal of electricity (charging the EV) from the grid.

Given the rise in the number of EVs, capital expenditure and technical requirements which would be placed on electricity generation, transmission and distribution (T&D) infrastructure, it is quite likely that the T&D value-chain will not be able to grow at a rate equivalent to that in EV adoption.

Until V2G technology is adopted at scale, Utilities will have to be ready for periods where the cost of installing and maintaining V2G charging infrastructure may outstrip the benefits of receiving power during peak demand.

V2G is our future

On an overall basis, electricity provided by V2G enabled vehicles may have minimal impact on the total electricity demand, but it can play an important role in managing within-the-day electricity demand scenarios.

Utilities will have to assess the scale of adoption of V2G technology and contemplate how it can be integrated into their strategy and investment decisions. Utilities can assess new business models such as owning or servicing batteries, benefits from owning charging stations and opening new revenue streams through facilitating the power-exchange transactions.

Utilities can also develop new customer strategies, provide value-added services to their customers based on the data generated by an EV thus improving customer experience.

Competition will come from discreet players and the customer will be king. Oil & Gas companies such as Shell and software companies such as Google have already ventured into the electricity/EV market with more capital, better data and software management capabilities and more understanding of the customer.

If EVs came yesterday, V2G is coming tomorrow (if not already). So, Utilities must act today!